….: Mahama’s blueprint for economic growth
Insurance and pension funds play a crucial role in supporting Ghana’s economic development. These sectors act as significant sources of investible funds for banks and financial institutions, offering security, risk mitigation, and long-term benefits for individuals, institutions, and businesses alike.
However, in recent years, these sectors have faced significant challenges, particularly due to the implementation of the Domestic Debt Exchange Programme (DDEP) and the broader financial sector clean-up, which has severely impacted pension funds and insurance investments. To address these challenges, John D. Mahama’s 2024 manifesto outlines a comprehensive plan to reform and strengthen Ghana’s insurance and pensions sectors.
The State of Ghana’s Insurance and Pensions Sectors
Since 2018, Ghana’s financial services sector has experienced significant turmoil, with insurance and pension funds being among the hardest hit. The DDEP, which restructured domestic debt, severely undermined the value of pension funds and the investments of insurance companies. These sectors, which traditionally provide vital support for economic growth, have been weakened, with reduced capacity to invest in businesses, infrastructure, and social safety nets.
Insurance companies, which offer protection against various risks—such as life, health, property, and agriculture—have struggled to maintain stability in the face of dwindling investment returns and regulatory uncertainties. Similarly, pension funds, which offer long-term savings for workers’ retirement, have seen their returns significantly eroded, creating uncertainty for retirees and the working population.
Recognizing the importance of these sectors, Mahama’s manifesto promises a bold plan to restore confidence, enhance resilience, and promote sustainable growth. This article outlines how the NDC’s policies on insurance and pensions will create a more secure financial system and contribute to national development.
Strengthening the Insurance Sector: Building Resilience and Expanding Coverage
Mahama’s manifesto for the 2024 general election places a strong emphasis on revamping the insurance sector, with a focus on improving resilience and expanding coverage for citizens. One of the key reforms proposed by the NDC is the introduction of a risk-based minimum capital regime. Under this system, the minimum capital requirements for insurance companies will be linked to the risks they carry. This ensures that insurance firms are adequately capitalized to handle the liabilities they assume, reducing the likelihood of insolvency and protecting policyholders.
Additionally, the manifesto proposes leveraging the Ghana Incentive-Based Risk-Sharing System for Agricultural Lending (GIRSAL) to promote agricultural insurance products. Agriculture is the backbone of Ghana’s economy, but it is also highly susceptible to risks such as natural disasters, pest infestations, and market fluctuations. By offering agricultural insurance, the NDC government aims to protect both small-scale and commercial farmers, as well as lenders, from these risks, ensuring that the agricultural sector remains productive and profitable.
The manifesto also highlights the need to promote the use of Provident Funds and Tier 3 Pension Funds as Group Life Insurance for workers. This policy will encourage employers to provide additional life insurance coverage for their employees, offering greater financial security for families in the event of a worker’s untimely death. It will also deepen the penetration of life insurance products in the market, increasing overall coverage for Ghanaians.
In line with Ghana’s Local Content Law, the NDC government will promote minimum local participation in foreign insurance companies. By encouraging foreign insurers to partner with local firms, Mahama’s administration seeks to strengthen the capacity of Ghanaian companies, promote skills transfer, and ensure that a greater portion of insurance premiums stays within the local economy. This policy will also provide incentives for local insurance companies to take equity stakes in international reinsurance entities, enhancing their financial stability and global reach.
Finally, the manifesto outlines plans to enforce the insurance of all public access facilities against fire and allied risks. This policy is aimed at ensuring that public buildings, such as schools, hospitals, and government offices, are adequately insured against disasters, protecting lives and public assets. In addition, the NDC government will facilitate the setting up of additional local reinsurance companies, enhancing local value and reducing the reliance on foreign reinsurance services.
Revitalizing the Pensions Sector: Safeguarding the Future of Workers
The pensions sector is a vital component of Ghana’s financial system, providing long-term savings and retirement security for workers. However, the sector has been severely impacted by recent economic and financial challenges, with pension funds suffering significant losses due to the DDEP. To address these issues, Mahama’s manifesto lays out a plan to restore the health of the pensions sector and ensure that it continues to play its crucial role in the economy.
One of the key reforms proposed by the NDC is to review the regulatory framework governing the pensions sector. This will involve working closely with the National Pensions Regulatory Authority (NPRA) to update and strengthen regulations to ensure that pension funds are adequately protected from future economic shocks. By improving oversight and ensuring that pension fund managers adhere to best practices, the NDC government aims to restore confidence in the pensions sector.
In addition, the manifesto highlights the need to promote the growth of Provident Funds and Tier 3 Pension Schemes. These voluntary pension schemes offer workers additional savings opportunities beyond the mandatory Tier 1 and Tier 2 pensions, providing greater financial security in retirement. By promoting the uptake of these schemes, the NDC government will encourage workers to save more for their future, reducing the burden on public pension funds and enhancing financial independence for retirees.
The NDC also recognizes the importance of enhancing financial literacy to ensure that workers are aware of their pension rights and the benefits of long-term savings. By working with employers, trade unions, and financial institutions, Mahama’s administration will promote greater awareness of pension schemes, encouraging more workers to participate and secure their financial future.
Conclusion: A Vision for Sustainable Growth
John D. Mahama’s 2024 manifesto presents a comprehensive plan to revitalize Ghana’s insurance and pensions sectors. By introducing a risk-based capital regime, promoting agricultural insurance, enhancing local participation in the insurance industry, and strengthening the regulatory framework, the NDC aims to create a more resilient and inclusive insurance sector. Similarly, the reforms proposed for the pensions sector will ensure that workers have access to secure, long-term savings and retirement benefits.
These reforms will not only strengthen the financial system but also contribute to economic growth by providing much-needed investible funds for banks and financial institutions. By restoring confidence in the insurance and pensions sectors, Mahama’s administration will lay the foundation for a more secure and prosperous future for all Ghanaians. Through targeted interventions and comprehensive reforms, the NDC is committed to building a financial system that works for the people and supports the nation’s long-term development goals.
